What are the minimum wage rates for 16, 17 and 18 year olds. Should the minimum wage be increased? Should there be a minimum wage rate for children under 16?
Minimum Wage Rates from October 2012
- Workers aged 21 - £6.19
- the 18-20 rate - £4.98
- the 16-17 rate - £3.68
- Apprentice rate, – £2.65. For apprentices under 19 or 19 or over and in the first year of their apprenticeship will increase to £2.60. An apprentice means the firm has to devote a certain time to training the worker. Traditionally apprentices get lower pay to compensate firm cost of training them.
Can 13, 14, and 15 year olds get a minimum wage rate?
No, the minimum wage rate only applies to workers who are 16 and above.
The youngest age your child can work part-time is 13 years old, with the exception of children involved in: television, drama, film. 1
Does Minimum Wage encourage Labour market Participation?
In theory increasing the minimum wage for 16-18 year old workers would increase the incentive to join the labour market because work will become more attractive compared to studying at school and not earning.
However, the minimum wage for 16 and 17 year-olds is still relatively low. It is £3.68 for people under 18. Therefore, the benefit of working on the minimum wage may still seem insignificant compared to the benefits from studying and getting qualifications which will enable higher life time earnings.
Also many 16 and 17 year-olds probably live rent free therefore there is not the same economic necessity to go out and get a job.
Personally, I think the effect of a minimum wage for 16-18 year olds is relatively insignificant, I can’t think of many students who would give up A levels just so that they could go and work in McDonalds for £3.68 an hour.
What is most likely is that there will be an increase in the participation of young workers doing part time jobs in addition to studying full time.
Case for Increasing the Minimum Wage Rate
- Unfair firms can pay a lower wage rate to young workers doing the same job as people over 21.
- Efficiency Wage Theory – the idea if you pay a higher wage, you will get greater motivation and labour productivity.
Problems of Increasing the Minimum Wage Rate for young workers
- Could lead to unemployment and less job opportunities. Many firms may be unwilling to employ workers if there is a significant increase in the minimum wage rate. This would particularly affect labour intensive industries like hairdressers and cafes.
- Arguably young workers lack experience and so firms need to spend time and money on training them. Therefore a lower minimum wage rate is justified to pay for the costs of on-the job training.
How Does the UK compare to other countries?
The UK minimum wage compares well compared to other countries like the US, Spain and Portugal, but still lower than some EU countries. International minimum wage rates